Multidimensional mechanism design: Revenue maximization and the multiple-good monopoly

The seller of N distinct objects is uncertain about the buyer's valuation for those objects. The seller's problem, to maximize expected revenue, consists of maximizing a linear functional over a convex set of mechanisms. A solution to the seller's problem can always be found in an extreme point of the feasible set. We identify the relevant extreme points, and faces of the feasible set. We provide a simple algebraic procedure to determine whether a mechanism is an extreme point. We characterize the mechanisms that maximize revenue for some well-behaved distribution of buyer's valuations. (c) 2007 Elsevier Inc. All rights reserved.